Showing posts with label Infosys. Show all posts
Showing posts with label Infosys. Show all posts

Monday, October 29, 2012

THE STRATEGIC LESSONS FROM INFOSYS!

LIVE AND EXCLUSIVE:INFOSYS TOP BRASS TALK TO b&e ON LIFE AFTER DEATH AND ON THE ROAD AHEAD. deputy editor virat bahri GIVES THE INSIDER ON THE STRATEGIC LESSONS FROM INFOSYS!

Kris prefers believing there’re many empty glasses that could have been filled up by Infosys, and that it hasn’t succeeded in doing so. Kris comes from a world, where Infosys – under Murthy – was used to comfortably growing at rates close to, and sometimes beyond, 100%. Even Nilekani sailed around the 50% figure for long – iconic growth in any context. Compare that to the fact that Kris ended last year with 29.5% growth. “In good times, high repeat business is a very good strategy; in bad times, bad!” says Kris on a Monday afternoon to us, “So should I architect a new sales strategy? We need a lot more hunters (who get newer businesses) than farmers (who maintain current businesses).”

The first quarter of FY 2010 hasn’t been too kind and has only supported Kris’s contention. Infosys’ revenues actually fell 2.9% quarter on quarter, in rupee terms. For the same quarter, as per Angel Broking, “Infosys’ IT Services Business was largely flat in US dollar terms on a sequential basis, while on a yoy basis, a fall of 2.8% was witnessed.” Further, onsite volumes declined 2.1% qoq (0.6% decline yoy) and offshore volumes slipped by 0.6% qoq (but grew by 9% yoy). The report mentions that in offshore volumes, this was the second consecutive quarter of sequential fall; and in onsite volumes, it was the third consecutive quarter of sequential decline.

To say that Infosys has been caught unprepared for this is to put it completely wrongly. In fact, the top management at Infosys has been preparing double time for the economic slowdown since the 15/9/2008 debacle, when Lehman collapsed, and when Bear Sterns collapsed much earlier in March. “I predicted the collapse of Bear Sterns six months before it actually occurred,” says Chief Financial Officer, S. Balakrishnan (Bala, for friends). And once Lehman collapsed, the world – as Kris tells – changed for Infosys.


Source : IIPM Editorial, 2012.

For More IIPM Info, Visit below mentioned IIPM articles.
 
IIPM : The B-School with a Human Face
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Saturday, September 01, 2012

ON “CLOUD SEVEN”

Uncertainty in the global environment persists, but Infosys has tremendous confidence due to the fact that the spends of clients are now back on track. Besides strengthening its global delivery model, the company is now looking at new avenues of growth. Will it be able to take the next leap forward?

Brevity wouldn’t be something that you would credit Infosys’ latest repositioning for, but there are also undeniable signs of the company’s will for a radical future-centric transformation. From being the company that helps its clients “win in the smart world”, the broad and comprehensive shift is towards “building the enterprises of tomorrow”. That, in turn, includes seven broad areas – improved engagement with digital consumers, setting up innovation hubs in emerging economies, IT for a sustainable tomorrow, smarter organisations, new commerce, pervasive computing and healthcare economy.

So how has the progress been for Infosys in these new endeavours? The company has gained some ground, if you see some of the orders they are getting. With structured and unstructured analytics, Infosys is aiming to be a partner to its clients and to help them be more future ready. A global auto major has taken their help to enable it to be more responsive to customer’s demands and to boost efficiency. A leading beauty care products manufacturer has sought Infosys’ services to assist in promotion, pricing as managing its portfolio in a better way. In the healthcare space, Infosys launched the iTransform product suite and is also helping a biotechnology company in drug discoveries. They have launched consulting and system integration operations in Australia and New Zealand and added a development centre in Mexico.The green focus is more towards conservation of resources at the moment, as the company claims to have already achieved a 17% reduction in per capita energy consumption. In the realm of pervasive computing, the company is in the process of making Finacle available on the Software as a Service (SaaS) platform for the convenience of its customers.

While the slowdown compelled Infosys to make several adjustments in the short term to protect its margins, it has also inspired it to look at ways to improve the portfolio of services it offers its clients and also look to get the high end businesses. When you look at results for FY 2009-10, Infosys, which was ranked 8th this year compared to 7th in 2009, posted net profits of Rs.62.66 billion, a yoy growth of 4.6%. Revenues were at Rs.227.42 billion, a yoy growth of 4.8%. Considering that the IT sector is just on its way to recovery, and Infosys had given a flat guidance in advance this year, the results were a reason for celebration. Commenting on the results, Infosys CEO Kris Gopalakrishnan comments in an exclusive with B&E, “Given the recessionary conditions and general slow recovery post the recession, Infosys has witnessed good growth over the last three quarters. The ‘New Engagement Models (NEM)’ have made a good impact and are accounting for almost 5 per cent of our revenues. Offshoring received sound endorsement for its value and Infosys has focused on being a trusted transformation partner to our customers.” The NEMs, i.e. outcome based and platform based pricing are expected to drive profits in the upcoming quarters, as the company endeavours to have an enduring, non-linear relationship between growth and headcount.


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Wednesday, August 08, 2012

"We Need Hunters, not Farmers"

LIVE AND EXCLUSIV: NFOSYS TOP BRASS TALK TO b&e ON LIFE AFTER DEATH AND ON THE ROAD AHEAD. deputy editor Virat Bahri GIVES THE INSIDER ON THE STRATEGIC LESSONS FROM INFOSYS!

“Our growth has significantly come down – from 35% to 7% to much lesser. It is a failure in some sense, since the opportunities are there, we have customer relationships, so I do feel we could have done better.” We’ve met S. Gopalakrishnan (Kris, for everybody), CEO and MD of Infosys, previously too, but perhaps this is the first time we sense his dejection that things could have turned out better for Infosys.

Factually, it’s not as if things are that bad. For starters, they’ve been rated India’s 7th most profitable company in the 2009 B&E Power 100 listings. The five year CAGR for revenues, till the month ending June 2009, was 32%. At the same time, the five year net income CAGR stood at 34%. Market capitalisation was screaming at $21.08 billion in July ‘09. Now it’s screaming better. The number of clients contributing to business has grown from 141 in 2004 to 330 this year. Since Kris took over, the revenue per client has regularly increased, Infosys has gone into newer services, entered newer markets, hired more people, consolidated existing clients, won a few awards, and a lot more.

But Kris comes from a world, where Infosys – under Murthy – was used to growing at rates close to, and sometimes beyond, 100%. Even Nilekani sailed around the 50% figure for long. Compare that to the fact that Kris ended last year with 29.5% growth. “In good times, high repeat business is a very good strategy; in bad times, bad!” says Kris on a Monday afternoon to us, “We need a lot more hunters (who get newer businesses) than farmers (who maintain current businesses).”

The first quarter of FY 2010 hasn’t been too kind. Infosys’ revenues actually fell by 2.9% quarter on quarter, in rupee terms. For the same quarter, as per Angel Broking, “Infosys’ IT Services Business was largely flat in US dollar terms on a sequential basis, while on a yoy basis, a fall of 2.8% was witnessed.” Further, onsite volumes declined 2.1% qoq (0.6% decline yoy) and offshore volumes slipped by 0.6% qoq (but grew by 9% yoy).

The top management at Infosys has been preparing double time for the economic slowdown since the 15/9/2008 debacle. “I predicted the collapse of Bear Sterns six months before it actually occurred,” says Chief Financial Officer, S. Balakrishnan (Bala, for friends). And once Lehman collapsed, the world – as Kris tells – changed for Infosys. And not because Lehman was a big client for Infosys (rather it was a bigger one for Wipro & TCS), but because the American financial industry – including companies like AIG – formed (and still do) an incredibly large part of Infosys’ earnings (more than 60%). Things were changing too fast at that time, and Infosys decided to change faster. And the hero, creditably, in the bloodied times, was not marketing, but finance, whose six strategies are the reasons Infosys today remains the most profitable IT corporation in India...

Strategy #1: Forget the long term; at least when it comes to your money!

Driven in a warlike fashion by CFO Balakrishnan, Infosys rewrote process orientation and risk control like never before. Realising that the war would be played on cost rather than price, Bala opened up a new battlefront, “I realised volaltility of foreign exchange was going to be the key issue as 98% of our revenues is in foreign currency; 62% from North America.” The dual reporting mechanism in both dollar and rupee terms made handling finances a supremely complicated Pythagorean conundrum for Bala and his team. Bala had already implemented the long term hedging route much earlier for Infosys.

Strangely, that was what was turning out to be the biggest headache for Infosys, which decided to shut down long term hedges & convert all exposures to a maximum of two quarters. This saved Infy from getting massacred.


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Friday, July 27, 2012

“Our Bfsi Clients are now Focussing Less on Costs’’

Kris Gopalakrishnan, CEO & MD, Infosys, talks to Virat Bahri on The Company’s results and The Management Changes

B&E: What is your outlook for the coming year in terms of topline and customer wins? What are the trends in client spending in the coming quarters?
Kris Gopalakrishnan (KG): We expect the next fiscal to be a normal year for the industry. We have given a guidance of 18-20% growth for the next fiscal. The previous quarter was good for Infosys with respect to large and transformational deals. Infosys closed four transformational deals and six large deals in the previous quarter. After the big recession in the US, clients have started to fine-tune their spending based on what is happening in the macroeconomic environment more quickly than in the past. This is what had impacted Infosys in the last quarter. Today, we have much more clarity on what they are going to spend on but whether they will actually spend that money is a concern. If clients face further challenges in the economic environment, they may fine tune their spending more.

B&E: Infosys, as a company, has been known as a founder-run corporation since inception. How will the entry of K V Kamath as Chairman help the company to achieve its strategic objectives?
KG: The recent developments in management ensure a seamless transition from founders to the next generation of leaders. This will prepare the company for the future as well. K. V. Kamath is experienced and is an expert in corporate governance. His role is to chair the board and oversee governance.

B&E: We have hardly seen a trend of cross-industry CEOs & Chairmans in India so far while there are many global examples like Alan Mulally, Dan Akerson, Jeff Kindler et al. According to you, how does it help to rope in an executive in the top management from a different industry?
KG: Every successful corporation needs to transform itself periodically to remain relevant to its stakeholders. The recent change in Infosys’ leadership team is a planned effort by the Nominations Committee to ensure smooth transitions within the company.


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Wednesday, July 25, 2012

A Change in The Infosys DNA?

Besides The Upheaval at The Top, it has been a Defining year for Infosys, which saw some Welcome Growth in Revenue Terms. However, Rupee EPS Guidance is a Concern

On certain critical counts, it has been a defining year for Infosys, in good ways as well as not-so-good ones. The exit of T. V. Mohandas Pai, member of the board and Director - HR, who had served the company for 17 glorious years, was a setback enough. Matters became worse when Pai began to talk about the preference of Infosys for experience over professionalism when it came to hiring people or moving them up the ladder. For a company where the founders hold hardly around 10% of the shares, it was a serious allegation indeed. That was like suggesting that Infosys wasn’t the ultimate case study when it came to successful separation of ownership vs management, at least not to the extent to which it is perceived to be.

On the financial front, the company posted revenues of Rs.275.01 billion, which was a growth of around 20.9% yoy. Net profits grew by a far more modest 9.7% yoy to reach Rs.68.23 billion. In particular, the company missed its estimate for the fourth quarter, wherein revenue grew by 1.1% sequentially in dollar terms to reach $1.6 billion. The company still faces some instable conditions in the US market and revealed that clients were slow in taking decisions especially in the fourth quarter. There is a disappointment with the rupee EPS guidance as well, which is between Rs.126.05 and Rs.128.21, a growth of 5.5-7.3% yoy. In a statement during the conference call, CEO Kris Gopalakrishnan commented, “Rupee guidance is muted as it is a reflection of the dollar guidance. We look at the appreciation of the rupee and then we translate that.” In addition, the company has hired some 43000 employees this fiscal. Administrative expenses rose by a significant 21.07% yoy to Rs.19.71 billion for the past fiscal. Mostly though, Infosys has had a much better growth compared to last fiscal, when revenue grew by just around 3.5% yoy and net profit grew by 3.6% yoy. In terms of shareholder satisfaction, the company ranks 6th in B&E ‘s list of India’s top wealth creators in terms of absolute increase in mcap of Rs.325.44 billion yoy. But since April 15 when the quarterly results were announced, the company’s share price has been severely hit. Infosys opened April 15 at Rs.3,296.15 and closed 9.67% lower at Rs.2,980.70 on the same day.


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